McDonald's: Meat scandal hits sales

TV report showed supplier using expired product

Associated Press

Associated Press

Published 7:35 pm, Monday, August 4, 2014

FILE - In this July 25, 2014 file photo, customers sit at a McDonald's restaurant in Hong Kong. McDonalds says a scandal over a meat supplier in China is hurting sales in the region and its global sales forecast for 2014 is at risk. The worlds biggest hamburger chain said in a regulatory filing Monday, Aug. 4, 2014, that theres been significant negative impact in China, Japan and other affected market. (AP Photo/Kin Cheung, File) ORG XMIT: NYBZ195

McDonald's said Monday that a scandal over a meat supplier in China is hurting sales in the region and its global sales forecast for 2014 is "at risk."

The world's biggest hamburger chain said in a regulatory filing that there's been "significant negative impact" in China, Japan and other affected markets. These regions make up about 10 percent of McDonald's Corp.'s revenue.

The Oak Brook, Illinois-based company had previously said it expected the worldwide sales measure to be "relatively flat" for the year.

The updated guidance comes after a Chinese TV report last month showed workers at one of McDonald's meat suppliers in Shanghai using expired meat. The supplier, Shanghai Husi Food Co., is a division of OSI, a company based in Aurora, Illinois that has been a longtime supplier to McDonald's around the globe. It counts numerous other fast-food chains as its clients.

As the Chinese government investigates Husi, some McDonald's restaurants have been left without beef or chicken. The plant in question also supplied some McDonald's restaurants in Japan. McDonald's is so far sticking by OSI, saying that it will work with other Husi plants in China to supply affected restaurants.

Yum Brands Inc. had also warned last week that the bad publicity has "shaken consumer confidence" and resulted in "significant, negative impact" at its KFC and Pizza Hut chains in China.